Jose Sanchez
Research expert covering society, economy, & politics for Latin America
Economy of Panama - statistics & facts
Panama is not only known for its beautiful Caribbean coastlines or for being a fiscal paradise, but the country is also one of the most developed countries in Central America and holds an important cornerstone for international trade with the, now controversial, Panama Canal. Moreover, it ranks with the second-highest Gross Domestic Product (GDP) per capita in Latin America, only behind Uruguay. As for the main economic sector, more than 67 percent of the Panamanian GDP comes from the services sector, with a very similar distribution of the workforce.
In short, Panama maintains a good position among its Central American peers, as a leader and example for the rest of the region. The forecasts indicate that the economic growth of the country will continue in the further years.
Unemployment and labor market
Panama is home to more than four million people, with a labor force participation of almost 68 percent. The country has an unemployment rate of around 7.4 percent, which is close to the regional average, but the situation gets worse with a youth unemployment rate of almost 17 percent. With the significant challenge of improving the situation for those without access to better opportunities, the labor market shares one of the most enduring challenges of the region, informal employment. Over 54 percent of the workforce works in the shadow economy, which means that employees do not have access to basic rights, pensions, or even safe and healthy working conditions.Panama Canal and international trade
In 2023, over 14,000 ships passed through the Canal of Panama, around 39 each day, generating around 3.35 billion USD on toll revenue the year prior. The canal has become central to the economic development of Panama and stays as one of the most transited routes in the region. The Central American country has constantly marked a negative trade balance, reaching –17.55 billion USD in 2023. This is due to the country exporting minerals and natural resources while importing mainly petroleum, crude oils, passenger cars, gas, and medicines.Inflation
Panama’s low inflation rate is nothing but an anomaly in Latin America, the region with countries with some of the highest inflation rates in the world, such as Argentina and Venezuela, and Haiti. In 2019 and 2020, the country even reached deflation. During 2023, the inter-annual inflation rate was 1.49 percent, while the regional average was estimated at 14.78 percent. Nonetheless, some sectors suffered price increases higher than the rest, in Panama’s case, restaurants, hotels, education, and alcoholic beverages registered the highest inflation rates of the last decade.In short, Panama maintains a good position among its Central American peers, as a leader and example for the rest of the region. The forecasts indicate that the economic growth of the country will continue in the further years.
